“It will mean that health care will take up a larger portion of their monthly budget, and that budget shift has to come from somewhere,” she said. “So for people who are currently renting and perhaps saving to buy a home, that (savings) advance may feel like the most discretionary part of their budget and is likely to be targeted.
“I think for households that are in the (home purchasing) ballpark, this is a big increase that could make a difference.”
Fairweather echoed her concerns — harkening back to the foreclosure stories shared in the years leading up to the 2008 housing crisis.
“A lot of the main culprits behind why someone would file for bankruptcy would be that they experienced a life event, like they developed an illness or cancer, and they were hit with really high medical bills,” she said. “This was before we had the Affordable Care Act, so sometimes the health care bills were so high that they would go bankrupt.
“If we return to a scenario where people have to pay more out of pocket for their health care costs because they don’t get as much coverage or [experience] random health events, [it] could put more homeowners at risk. That could impact their ability to repay their mortgage. I think this is something that people trying to measure risk in the housing market would be concerned about.”
White House pauses health care announcement
President Donald Trump was expected to roll out a plan to address rising health care costs — possibly including an expansion of ACA subsidies.
However, the White House has now paused the announcement amid Republican resistance in Congress, according to several news outlets reported Monday.
A Nov. 18 post on Truth Social from Trump stated, “THE ONLY HEALTH CARE I WILL SUPPORT OR APPROVE IS SENDING THE MONEY DIRECTLY BACK TO THE PEOPLE,” but no further details about that strategy were shared.
Long-term costs rise
Freer said the U.S. health insurance system has been squeezing household budgets for years, but the next wave of increases could be more dramatic.
“When we think about rising premiums, people don’t always make the connection that those rising premiums are really having a negative impact on people’s incomes and on people’s ability to save money and invest in things like a first home or other essential goods, because a large portion of their income goes to health care.”
She also pointed to employer-sponsored insurance — the most common form of coverage — where the average household premium is about $27,000 per year.
Those costs have increased more than 50% in the past decade, Freer added.
“Of [the One Big Beautiful Bill Act] and significant Medicaid cuts coming online in the coming years, [potentially] Millions of Americans will lose coverage, and that will further increase ACA and employer-sponsored premiums,” she said. “That’s because there will be more uncompensated health care costs that will be shifted to patients in all these different ways.”
Freer quoted a recent study showing that rising health insurance premiums reduced cumulative household income by $125,000 between 1988 and 2019.
She noted that this amount equals, or in some years exceeds, the price of a home in many markets during those decades.
“We would like to see the conversation shift from continued endless government subsidies to private insurance conglomerates using their market power to really inflate prices,” Freer said. “Instead, let the conversation be: ‘How can we bring those prices down, and how can the government use its regulatory authority to prevent corporate price increases?’”
Steep hill for entrepreneurs
Fairweather said many business owners — including real estate agents — are particularly vulnerable to higher health insurance premiums, exacerbating existing problems in qualifying for mortgages.
“They have to go into the open market to pay for their health insurance,” she said. “It’s been a challenge before [independent contractors] to get a mortgage because they typically don’t have as solid an income history as W-2 employees. It will become increasingly difficult for them to get a mortgage while at the same time healthcare costs rise.
“You might see people increase their business expenses to lower their taxable income. It may help their ability to afford health insurance, but hurt their ability to qualify for a mortgage.”
America’s health care system presents a unique housing problem
The US spends more per person on healthcare than any other major country – with much higher out-of-pocket expenses and insurance premiums.
Research from the Commonwealth Fund And Organization for Economic Co-operation and Development shows that Americans are paying about double what households pay in systems like Germany, France or Great Britain – despite similar or worse health outcomes.
Freer pointed out Consumer Financial Protection Bureau Research shows that medical debt contributes to thousands of rejected mortgage applications every year.
“[Medical debt] is a poor predictor of loan repayment, and probably shouldn’t be considered when evaluating people for mortgage applications. We’re already seeing medical debt and healthcare costs impact people’s ability to get a mortgage and buy their first home or a new home.”
A cascading threat to affordability
Hale said a silver lining to the ACA subsidy debate is leading to more health care talk.
“The benefit of these subsidies expiring is that it has created a news cycle and brought a lot of attention to health care subsidies in health care costs,” she said. “I think one good thing that can come out of this episode is that there will probably be a little more focus on these costs in the share of the U.S. budget.”
Freer said the stakes are high and immediate — for homebuyers and every American.
“Our policy solutions are about reducing costs and eliminating some of the conflicts of interest that exist in our current health care system,” she said. “And then also banning some of the practices that are abused by private companies to drive up costs or deny care, which is another way to increase their profits.”
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